BP Oil Spill Update: BP Searching For Reduction In Upcoming Fines

It’s been more than 1000 days since the Gulf of Mexico oil spill. Coinciding with this anniversary, BP is claiming a reduction in its fine of $3.4 billion. The reason is that they did it well by collecting at least 800,000 barrels of spilled oil. But why are they asking for such a reduction if they don’t have a fine yet, and why is it related to the barrels collected?

BP Oil Spill: Here Is What Happened!

Two years ago, on 20 April 2010, an oil rig called Deepwater Horizon, located at the Gulf of Mexico (about 60km southeast of the Louisiana coast), exploded. The explosion killed 11 workers, and caused the rig to sink, causing the worst oil spill in the history of the oil industry. They didn’t stop the oil flow until 15 July 2010. The spill was estimated in 8.400m3/day spew into the Gulf, so it makes a total of 49,000m3 of oil, or 4.9 million barrels! It wasn’t entirely sealed until 19 September 2010, so maybe the sum is even higher!

They used floating barriers, sand barricades, and skimmer ships to stop the floating oil… and a dispersant called Corexit. Well, if the oil wasn’t enough, a recent study showed that the Corexit made the oil 52 times more toxic, and it allowed hydrocarbons to penetrate into the groundwater. In 2011, some divers found what many scientists and managers feared: underwater plumes of dissolved oil not visible at the surface, and there was a 210km2 (80 sq mi) area with no life surrounding the oil well. Oil patches are still being spotted along with the consequences of this disaster. Scientists reported that they were finding an alarming amount of mutated crab, shrimp and fish, as the result of the chemicals released during the spill. Also, the last two years dolphins and whales are dying in the Gulf at an abnormally high rate.

BP Oil Spill: The Consequences?

There was no trial…only a settlement. An agreement between BP and the U.S.A. Justice Department where the company pled guilty for 14 counts, including manslaughter. And BP’s former vice-president, David Rainey, pleaded guilty for lying to Congress and concealing documents about the magnitude of the spill (Surprise, Surprise!). The settlement established the fine at $4.5 billion. Just so you know, BP does $2.2 billion only with Pentagon contracts. Another private settlement was reached last March, this time about medical monitoring of possible effects from the exposure and to cover private losses valued by the company in $7.8 billion. That’s a lot of money, but if we think that in 2011, this company had a profit of $25.7 billion, so it’s not that much.

But thankfully, there’s more. They have still to establish another fine for civil damages under the Clean Water Act. And this is why BP would like a reduction in the fine. This fine will be determined by the estimated number of barrels of oil spilled until the well was sealed. Every single barrel will cost BP as much as $4,300 (it can be between $1,100 and $4,300 per barrel), so the total amount to pay could be about a$21 billion fine because of “gross-negligence”. This time we will have a non-jury trial, on February 25th to determine the liability of the spill and another one in August to determine the volume of the spill and how much effort the company took to stop it. So, basically, what BP wants is to minus the amount of oil they recovered to the total amount of oil spilled. In other words, what they collected, is not spilled oil so they don’t have to pay for it. They want credit for fixing their own disaster.

Do you think they will achieve the reduction? What should they do with the money (if they have to pay)?